LONDON/ULAANBAATAR (Reuters) – Rio Tinto and Mongolia have signed a deal for the supply of power to the miner’s giant copper mine extension at Oyu Tolgoi by mid-2023, with both sides saying the framework agreement marked a step forward after a protracted dispute.
The Oyu Tolgoi project is central to Rio Tinto’s push to diversify its portfolio away from iron ore, but it has faced a series of challenges as Mongolia’s fragile government wrangles over how to maximize benefits for the country.
First production at the $5.3 billion underground expansion located near the southern border with China is scheduled for early next decade, creating one of the world’s biggest copper suppliers.
The construction of a 300 megawatt plant, close to the Tavan Tolgoi coalfields, to supply electricity to the mine will start in 2020 under the new agreement. The plant is expected to be operational by mid-2023, slightly later than the 2022 date mooted after the government canceled an earlier power agreement in February.
The government of Mongolia owns 34 percent of Oyu Tolgoi with the remainder held by Turquoise Hill Resources, which in turn is 51 percent owned by Rio Tinto.